Mike Larson | Editor-in-Chief
Yesterday wasnât a fun day if you owned stock market âharesâ like Broadcom Inc. (AVGO). But if you invest in âtortoises?â You were sitting pretty!
Take a look at the MoneyShow Chart of the Day. It shows the action in the chip sector standout AVGO yesterday, down 12.6% after it released earnings â plus the performance of the Dow Jones Industrial Average, the iShares Russell 2000 ETF (IWM), the State Street Health Care Select Sector SPDR ETF (XLV) and the State Street Financial Select Sector SPDR ETF (XLF). They were up anywhere from around 1.7% to 3%.
AVGO, INDU, IWM, XLV, XLF (1-Day % Change)
Source: TradingView
Zoom out to a year-to-date timeframe and frankly, itâs no contest. Broadcom was up 38.7% through Wednesdayâs close.
The IWM was no slouch at 17%. But the Dow was up only 6.2%, while the XLV was down 4.2% and the XLF was off 6.6%. Those are tortoise-like performances by comparison, especially with the S&P 500 Index (^SPX) in the midst of its longest weekly win streak in 41 years!
So, what does yesterdayâs action âmeanâ for traders? Is it just a one-day rotation? Or something more?
Put me in the camp of nothing muchâŚYET. But with investors all-in on technology stocks in general and AI/chip names in particular, Broadcomâs action is telling.
The companyâs fiscal second quarter sales surged 48%. Its earnings per share beat estimates. Yet AVGO still tanked the most in 16 months.
When expectations are sky high, you have to keep raising the bar. Broadcom didnât â and it paid the price. IF we get one or two more high-profile disappointments, more investors and traders will start thinking âYou know what? Tortoises arenât the ugliest portfolio pets after all!â
The Dow just hit a record high as investors rotate from chips to financials and healthcare! Meanwhile, the broader economy remains resilient, with May's jobs report doubling expectations at 172,000 new positions.
As for tech? Broadcom Inc.âs (AVGO) earnings miss - plus S&P's index restrictions on upcoming IPOs like SpaceX and OpenAI - are weighing on the sector. Is this an early warning sign of more tech stock problemsâŚand more sector outflows? Check out my MoneyShow Video Market Minute for all the details!Â
All software isnât doomed. In fact, money is finally chasing the theme again. One AI software stock to trade in the Agentic Era is Oracle Corp. (ORCL), suggests Lucas Downey, co-founder of MoneyFlows.
The S&P 500 Index (^SPX) has continued to make new highs, but the story beneath the surface is far different. Technology and semiconductors have become the dominant force behind market performance, creating a widening gap between the S&P 500 and nearly every other major sector and factor, writes Lance Roberts, editor of the Bull Bear Report.
đĽ đ ASML Stock Is Hot, But Please Donât Go Too Overweight on Chip Stocks. (Barchart)
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